Key issue: numerous delays and re-schedules on the target opening date for DID due to the BEE unable to successfully implement the automated baggage system, which caused massive financial damages to the City, airport, BEE. Moreover, the delays also brought great inconvenience to national passengers and damage the potential city development since the new airport is going to be significant city symbol, which would attract investments and other resources.
From the Babe’s perfective, beside financial penalties, this project management failure brought negative influences to its reputation in the industry.Sub issues: Mechanical and software problems: additional equipment must be installed to solve problems like damaged and lost bags during transit, and jammed baggage carts in tracks. New software must be designed in order to coordinate with the airport system.Design and build at the same time: after BEE signed the contract in April 1992; the tight lead time only allows this automated baggage system to be designed while building.This practice brought great uncertainty to the project on both budget and process management. Increase in complexity: before Denver airport started this project, there was o other airport in the US has accomplished a fully automated baggage in such large geographic coverage and baggage transportation speed. The other two airports which implemented similar system took two years to complete the testing phase, but in a much simpler scope.Continuous changes on project scopes: As per the contract agreements, Airport was not allowed to change certain designs after certain dates; however, BEE had to keep changing mechanical and software designs at the time only six months prior opening the airport due to the system design changes made by the Airlines.
Ineffective coordination between BEE and airlines: poor communication and cooperation experiences among both parties during the project. The ineffective collaboration caused issues like the delay of the filter purchasing for the clean electricity needed for the motors.Leadership change caused efficiency decline: the death of the Babe’s Chief Airport Engineer affected the development of the project significantly, where new manager could not function as effective as Slinger.Root Causes: This DID baggage-handling project fail was caused by many factors; such as canonical/software failures, lack of budget control procedures, bad schedule monitoring system and so on. However, from the fundamental perspective speaking, the fail of the project management is caused by two main factors.
1.Major flawed decision made Airline to change the original project plan: the automatic baggage system was not originally included in the design of the airport project plan, which the airport was already under construction was designed with sufficient space for such technical baggage system to attach in. This change in strategy was made in 1991 , when he project management team required an integrated baggage system need to be built. Only two years before the airport opening date, the major project scope change was extremely poorly considered and did put the whole project in danger.The project management team failed to evaluate the important effects this change of scope would bring to the entire project.
There was also no evaluation made on risks, technology required, and how long the testing would possibly take in order to release to customer end. 2. Major flawed decision made by Airline to proceed with the automatic sewage system: there were several of signs showing back before entering into the BEE contract that the implementation would take more than scheduled two years.There were three bids received which none of the vendors could build the system in 2 years.
Even though originally rejected the request initially by realizing the difficulty, after being convinced by the incomplete prototype, BEE took the risk and signed the contract. The failure by both Airline project management and BEE to decide to proceed with the system without proper back up plan and risk evaluation put the project to allure at the beginning. BEE SOOT Analysis:1 . Strength: leading expertise in airport system design and manufacturing. Babe’s self-contain characteristic plus its great experiences provided great advantage to accomplish the project objective.2.
Weakness: poor relationship established with Airline made the situation even more difficult to moving forward in a time manner. 3. Opportunities: even though the opening date was delayed many times, BEE was making progress step by step to make this system to collaborate with the airport. From the technical perspective, BEE was confident to make it happen.
4. Threats: time was chasing and penalty was charged into a daily base.The City even required BEE to pay for the backup System which approximately cost $50 million. More importantly, BEE was unsure about the attitudes from the Airline and City, who if still willing to continue the project with it.Options: 1 .
BEE to withdraw from the contract and cancel the agreement. Under that circumstance, BEE should consider the possibility to withdraw, especially after a third German company was hired for the project, which showing that the Airline pushed all responsibilities and blames to BEE.Advantages: Cut damage.
No more continuous investments putting into the project while paying penalty. To switch to other achievable and more profitable projects as earlier as possible. The opportunity cost of holding with DID would be huge.Disadvantages: Company reputation would be affected in negative ways, which could influence on future businesses.